Datadog Inc (DDOG)

Cash conversion cycle

		Mar 31, 2025	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020
Days of inventory on hand (DOH)	days	—	—	—	—	—	—	36.16	34.91	34.18	34.79	—	—	—	—	—	—	—	21.97	—	—
Days of sales outstanding (DSO)	days	63.12	81.44	70.10	81.32	72.92	87.34	72.82	64.09	74.69	87.06	83.11	81.64	84.22	95.38	93.15	89.94	83.86	98.81	81.85	94.20
Number of days of payables	days	63.79	76.21	70.43	95.71	55.83	78.06	77.54	44.71	40.79	24.71	31.79	60.63	25.95	39.38	60.83	59.79	29.28	59.83	67.25	62.98
Cash conversion cycle	days	-0.67	5.23	-0.34	-14.39	17.09	9.28	31.44	54.29	68.08	97.15	51.32	21.01	58.27	56.00	32.32	30.15	54.58	60.94	14.60	31.22

March 31, 2025 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 63.12 – 63.79
= -0.67

The analysis of Datadog Inc's cash conversion cycle (CCC) over the provided period reveals significant fluctuations, reflecting ongoing operational adjustments and strategic shifts. Initially, the CCC demonstrated a general trend of variability, with notable peaks and troughs. For example, on December 31, 2020, the cycle extended to approximately 60.94 days, indicating a longer duration to convert investments into cash, potentially due to slower collections or extended inventory periods.

Subsequent periods show some improvement, with the cycle decreasing to around 21.01 days by June 30, 2022, suggesting increased efficiency in managing accounts receivable, accounts payable, or inventory management. However, this positive trend was followed by a considerable deterioration, culminating in a peak of approximately 97.15 days on December 31, 2022, which signals a period of delayed cash recovery or extended accounts receivable collections.

From late 2022 onwards, the CCC demonstrated notable reductions, particularly reaching as low as approximately 9.28 days on December 31, 2023, indicating a significant enhancement in cash conversion efficiency. This sharp decline implies that the company has optimized its receivables and payables, possibly by accelerating collections or delaying payables without harming supplier relationships. The subsequent figures for March and June 2024 show continued improvements, with cycles turning negative, at -14.39 days and -0.34 days respectively, suggesting that the company may be generating cash faster than it is paying its suppliers—potentially through efficient receivables management or favorable supplier terms.

By the close of September 2024, the CCC slightly increased to -0.34 days, and further to approximately 5.23 days on December 31, 2024. These values are indicative of a highly optimized or possibly cash-preserving operational model, where cash inflows outpace or coincide with outgoing payments. The continuation of negative or near-zero cycles through early 2025 indicates sustained efficiency in cash management processes.

Overall, this progression illustrates a pattern of initial variability, later substantial improvements, and eventual stabilization at very efficient levels. The trend toward negative or near-zero days reflects an increasingly effective management of working capital, with Datadog Inc likely leveraging optimized receivables, payables, and inventory practices to speed up cash flows and minimize working capital needs.